The Rating and Valuation Act 1953 sets out a system of property taxation used to pay for community, water and sewerage services applied to each property and are better known as “rates”.
Rates are a property tax which is used to pay for services provided to a property:
- local services provided by a local authority;
- burial grounds provided by churchwardens; and
- water and sewerage services by the Manx Utilities Authority.
How are rates calculated?
For rating purposes each property has a gross value which is the annual rent at which the property might reasonably be let, where the landlord was responsible for the payment of the tenant’s rates and taxes and the cost of repairs and maintenance.
A gross value can be calculated for each property even if it is owned by the occupier. The current gross value for each property was established in 1969 or if a property was built or improved after this date, is based on the rental value of a similar property built before this date.
The rateable value of a property is calculated by reducing the gross value by a percentage set out in the Rating and Valuation Act 1953 as follows:
- Land without buildings – none;
- Domestic properties – 20%;
- Commercial – 30%;
- Industrial – 50%.
The Treasury maintains a list which sets out the rateable value of each property. This figure can be found in the annual rates bill issued each April for payment in June, or by contacting the Treasury Valuations Office (tel. 685658).
The amount of money raised by property taxes is determined by local authorities or the Manx Utility Authority and not by Treasury. The total amount to be collected is divided amongst properties based on the rateable value; a property with a large rateable value will pay more than one with a smaller rateable value.
To calculate the amount of rates payable on each property the rateable value is multiplied by a local rate in the pound to determine the total. The rateable value is also used to determine the charge for providing clean water and sewerage services in a similar manner.
For properties across the Island with the same rateable value the water and sewerage rates are the same but the local authority rates will vary in each area.
Example of rates calculation
A four bedroom semi-detached house was sold in 2013 for £320,000 and had a rateable value of £128 based on the rental value in 1969.
Property taxes for this property in 2015/16 are as follows:
|Rating authority||Rates calculation||Amount payable|
|Local Authority||345.5p x £128||£442.24|
|Burial ground||7.00p x £128||£8.96|
|Swimming pool||2.5p x £128||£3.20|
|Local Authority Total||£454.40|
|Water rate||313.97p x £128||£401.88|
|Sewerage rate||61.29p x £128||£78.45|
Changes to properties
Anything which would affect the rental value of a property (whether it is rented or owned) can change the rateable value of a property and therefore the amount of property tax (rates) payable.
Where the size of a property is increased e.g. it has extra rooms added, or the property is sub-divided this may change the gross value of a property. When this occurs there is a requirement set out in law for the owner to contact the Treasury Valuations Office (tel. 685658).
Where external factors such as immediate adjacent building works or significant flooding for example impact on the potential rental value of the property the gross value a ratepayer can contact the Treasury Valuations Office (tel. 685658) to ask to have their property revalued.
Where a ratepayer is not content with the decision of Treasury Valuations Office with regard to the gross (rental) value of a property they can appeal this decision to the independent Rent and Rating Appeal Commissioners.
Reform of domestic property taxes
There have been numerous proposals to reform property taxes and Tynwald has now agreed to progress reform with the objectives that legislation should be modernised and a rating system be introduced for domestic properties based on capital values rather than rental values. The capital value of a property is price a property would fetch on the open market when sold in good condition.